View full sizeThe sweeping conspiracy and money-laundering case against indicted N.J. engineering firm Birdsall Services Group all began with a secret recording of a former executive, Philip Angarone Jr., who was going through a divorce. Angarone is shown here in a 2005 file photo.file photo

TRENTON — The troubles of one of New Jersey’s largest and most influential engineering firms began, as troubles often do, with a divorce.

It was about a year ago that Philip Angarone Jr., then the marketing director of Birdsall Services Group, met with his estranged wife to discuss how much money he was earning. He said he seemed to be making more than he actually was because of the large number of bonuses he had been collecting.

The bonuses, Angarone explained, were illegal reimbursements for political contributions he had made on behalf of the company.

What Angarone didn’t know was that his wary wife was secretly recording the conversation.

Those and other details emerged in a confidential affidavit filed by the Attorney General’s Office last week in state court as the Eatontown-based company’s assets were seized and seven current and former executives and shareholders were indicted for first-degree conspiracy and money-laundering.

The office and the court declined to release the affidavit because the investigation is continuing, but The Star-Ledger obtained a copy.

The affidavit lays out how executives at Birdsall funneled money through employees to elected officials to win millions of dollars in public contracts: They held regular meetings, hand-picked the contributors, told them what to do and kept records of their reimbursements.

But the six-year-long scheme began to unravel in February of last year, the affidavit says, when the recording of Angarone’s unwitting admission was handed to detectives, touching off an investigation that authorities say led to the breakup of one of the largest pay-to-play conspiracies ever uncovered in the state.

The indictment handed up Tuesday claims that from 2006 to 2012, the seven defendants disguised more than $686,000 in political contributions by writing, or asking employees to write, checks of $300 or less — which by law do not have to be disclosed — and then illegally reimbursing them through salary bonuses.

The affidavit also implicates eight employees who have not been charged, suggesting the total amount of hidden contributions could ultimately run into the millions of dollars.

The bonuses were required to be reported to the state Election Law Enforcement Commission as corporate campaign contributions, but authorities say the company routinely lied in disclosure reports to avoid being disqualified from holding or bidding on new public contracts.

Authorities have declined to say which or how many elected officials or political groups, Republicans and Democrats alike, received the contributions.

After agreeing to a plea deal in November, Angarone told detectives the checks from the executives and other employees were made for $299 not only to avoid reporting requirements, but also as a "signal to recipients that the funds represented ‘unofficial’ Birdsall contributions."

"He acknowledged that 75 percent of Birdsall’s political contributions were illegally made through its employees," the affidavit says, and "explained that the purpose of the illegal contributions was to curry favor with elected officials and gain a competitive advantage."

Eileen Kuhfahl, a former marketing manager for Birdsall who also agreed to a plea deal with the state last month, told detectives, according to the affidavit, that she "attended weekly meetings to decide which individual would make a specific contribution, and how they would be reimbursed."

Kuhfahl says in the court papers that the illegal contributions "regularly won contracts" for the company.

"For example, if there were three upcoming bridge projects in a particular county, one would be allotted to Birdsall following a contribution to a county candidate or committee," she told authorities. "Birdsall would be awarded the allotted project so long as their bid represented a ‘decent price,’ and not ‘double’ the amount of a competing bid, or something ‘unreasonable.’"

The affidavit indicates that about half of Birdsall’s 3,500 projects a year are in the public sector. Reports filed with the state Election Law Enforcement Commission show the company received more than $28 million in public contracts in 2011, and $86.7 million since the start of 2008.

A state Superior Court judge last week granted a request by the Attorney General’s Office to seize the company’s $41.6 million in assets.

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Birdsall subsequently failed to make payroll for its 325 employees and filed for Chapter 11 bankruptcy, claiming that without access to its bank accounts, it would be forced to shut down — derailing or delaying hundreds of public projects statewide that the company is under contract to complete.

Some local governments have already stopped doing business with Birdsall or are reconsidering current contracts.

Kuhfahl, 48, of Bradley Beach, admitted on Feb. 12 to making prohibited corporation contributions through employees, a fourth-degree offense. The state will recommend a sentence of probation. Angarone, 40, of Hamilton, admitted Nov. 30 to the same charge as well as third-degree tampering with public records or information. Prosecutors will recommend a sentence of about a year in jail.

If convicted, the company executives indicted Tuesday will face 10 to 20 years in prison.